What types of payroll taxes does Gusto payroll handle?
Gusto Payroll handles every major payroll tax for you — calculating it on each payroll, withholding the right amounts, filing the returns, and paying the tax agencies on your behalf in all 50 states. Instead of tracking dozens of federal, state, and local deadlines yourself, Gusto automates the entire payroll tax lifecycle. Here is what that covers, what it costs an employer in 2026, and where your own responsibilities begin.
Federal payroll taxes
- Federal income tax withholding — calculated from each employee's Form W-4 and remitted to the IRS.
- Social Security tax (FICA) — 6.2% withheld from the employee and matched 6.2% by the employer, up to the annual wage base.
- Medicare tax (FICA) — 1.45% withheld and matched by the employer, plus the 0.9% Additional Medicare Tax on high earners.
- Federal Unemployment Tax (FUTA) — paid entirely by the employer and reported on Form 940.
Gusto files your Form 941 (quarterly federal return) and Form 940 (annual FUTA return) automatically, and deposits withheld taxes on the correct IRS schedule.
2026 payroll tax rates at a glance
| Tax | Employee pays | Employer pays | 2026 wage limit |
|---|---|---|---|
| Social Security | 6.2% | 6.2% | First $184,500 |
| Medicare | 1.45% | 1.45% | No limit |
| Additional Medicare | 0.9% | None | Wages over $200,000 |
| FUTA | None | 0.6% after the state credit (6.0% gross) | First $7,000 |
| State unemployment (SUI) | None in most states | Your assigned state rate | Set by each state |
What payroll taxes cost an employer: a worked example
Take one employee on a $60,000 salary. On top of the salary, the employer owes $3,720 in Social Security (6.2%), $870 in Medicare (1.45%), and $42 in FUTA (0.6% of the first $7,000) — $4,632 in federal employer taxes, or about 7.7% of pay. State unemployment comes on top and varies widely: a 2.7% rate on a $10,000 state wage base adds another $270. The employee separately has the same $3,720 and $870 withheld from their paychecks, plus federal and any state income tax.
Gusto runs this math on every payroll, shows the employer cost before you approve, and moves the money to each agency on schedule. To see the employee side, run the numbers through the Gusto paycheck calculator or a state paycheck calculator.
State payroll taxes
- State income tax withholding where applicable — some states, like Texas and Florida, have no state income tax.
- State Unemployment Insurance (SUI/SUTA) — an employer-paid tax based on your assigned state rate and wage base.
- State Disability Insurance (SDI) and Paid Family & Medical Leave — in states that require them, such as California, New York, and New Jersey.
Gusto applies your specific SUI rate, files the state returns, and supports multi-state payroll if you have employees working in more than one state. You still need a state withholding and unemployment account in each state where you have employees; Gusto walks you through registering them during setup.
Local payroll taxes
Many cities, counties, and school districts levy their own payroll, occupational, or school-district taxes — common in Ohio, Pennsylvania, and parts of New York and Kentucky. Gusto identifies the local taxes that apply based on each employee's work and home address, then withholds and files them, so you do not have to research local rules on your own.
Year-end tax forms
- Form W-2 — prepared, filed with the SSA, and delivered to employees at year end.
- Form W-3 — the transmittal summary that accompanies your W-2s.
- Form 1099-NEC — generated and filed for contractors you pay through Gusto.
Employees and contractors can download their own forms from Gusto's self-service portal, which cuts down year-end requests to you.
The filing calendar Gusto tracks for you
- Tax deposits — monthly or semiweekly, depending on how much tax you reported in the IRS lookback period. Gusto works out your schedule and deposits on time.
- Form 941 — due April 30, July 31, October 31, and January 31.
- Form 940, W-2s, W-3, and 1099-NEC — all due January 31.
- State and local returns — usually quarterly, on each agency's own calendar.
Is Gusto compliant with state and federal payroll regulations?
For payroll taxes, yes. Gusto keeps its tax tables current with federal, state, and local changes, files every return listed above, reports new hires to the state, and backs its filings with an accuracy guarantee: if an error on Gusto's side causes a tax penalty, Gusto helps resolve it and covers eligible penalties. You also get clear tax reports and a full history of every filing.
Payroll tax compliance is not the same as employment-law compliance, though. As the employer, you remain responsible for:
- Accurate inputs — current W-4s, correct addresses, and the right pay rates. Penalties caused by bad data or an underfunded account are not covered by the guarantee.
- Worker classification — deciding who is an employee and who is a contractor.
- Wage and hour rules — minimum wage, overtime eligibility, and paid sick leave. Gusto calculates overtime from approved hours, but it pays what you configure.
- Insurance and postings — workers' compensation coverage and required workplace posters.
Gusto's higher plans add compliance alerts and HR resources that help with these, but they guide your decisions rather than make them. Compare what each plan includes on our Gusto pricing guide.
See how Gusto's tax handling stacks up against ADP, QuickBooks, and others on the payroll comparison chart. New customers can also earn a $300 Visa card for running their first payroll with Gusto.